Down With ‘Post-Globalization’: Free Trade Can and Must Survive Covid-19

Learning the right lessons from the pandemic is essential, but jumping to the wrong conclusions will only add to its costs. In trade policy, this is no hypothetical danger. It’s happening.

Even before Covid, many governments had abandoned their support for liberal trade. Remarkably, at President Donald Trump’s initiative, the U.S. set this new direction, and President Joe Biden then followed his lead. (“Trump without the tweets,” as one analyst put it.)

For both administrations, the drawbacks of trade — downward pressure on wages and jobs in particular regions and industries — commanded all attention. Its undoubted benefits — higher living standards overall — were seemingly forgotten. The pandemic only made things worse, highlighting the risks of relying on foreign components and extended supply chains. Discussion turned to “post-globalization.”

This new thinking threatens slower global growth, lower real incomes, and diminished prospects for every kind of international cooperation. Yes, the costs of trade should be taken more seriously — but there are better remedies than brainless protectionism, even when rebranded as smart “reshoring.”

Remember the basics: Trade is simply a way to have more for less. Just as it’s idiotic to smash labor-saving machines to save jobs, it’s foolish to keep producing goods and services at home that can be supplied more cheaply from abroad. International competition drives innovation. Innovation spurs growth. Economies adjust as patterns of demand and supply shift. When societies get richer, they have more workers sitting at desks and fewer standing on production lines. Resisting this is like saying that the secret of success is to keep workers on the farm.

Fear of trade has mounted because governments have failed to deal effectively with the downsides. Cushioning workers who lose out is crucial. The best way is to help them retrain or relocate, so they can switch careers as demand changes. But this also means equipping workers from the start with the foundational skills they’ll need for the mid- and upper-skill jobs of the future. That’s why the core of any prosperous economy is its schools — an area in which the U.S. is doing badly.

The pandemic highlighted a different issue: what happens when supply chains get disrupted. Acute shortages and spiking prices got governments wondering about bringing production home, a move that sits well with the prevailing anti-trade mood.

It’s the wrong answer. With isolated exceptions, typically related to national security, the focus should be on resilience rather than self-sufficiency. A lot of companies have learned this lesson for themselves and are looking to strengthen their supply chains. In many cases, including in the U.S., strong post-Covid recoveries show how international commerce has already helped economies bounce back.

Nonetheless, governments can do more to encourage these efforts. This starts with identifying threats and sharing information, so that potential bottlenecks can be planned for. There’s a case, while keeping a careful eye on costs, for building more stockpiles of essential goods and materials, perhaps on a regional basis. Far from raising barriers at the borders, governments should be revisiting their regulations and infrastructure investments to speed the flow of trade — especially when patterns shift abruptly under stress — so that their own policies are no longer a principal cause of blockages.

The downsides of trade aren’t imaginary. Policies are needed to mitigate them and governments have too often neglected this vital task. But it would be hard to exaggerate how misguided it would be to turn any further against trade itself. Globalization still works, and the world needs it more than ever.